I’ve been a journalist for more than 20 years writing about business one way or another. Everything I‘ve learned in all this time can be boiled down to one truth: finance, transportation, marketing, supply chain - no matter what the original subject is all roads lead back to sales.

Taxes, Apple's Profits and Why It Will Never Manufacture in the U.S.

In a previous life I used to write about tax issues and how tricky even sophisticated multinationals found it to navigate this area. To the uninitiated I say, be afraid, be very afraid. One of the advantages of a freelance life is that I can pick and choose what to write about, more or less. Not having to write about transfer pricing and multinational tax strategies, almost, not quite, but almost makes up for the miserly health insurance for individuals that is the lot of most freelancers.

So it is with great reluctance I introduce the subject of global tax strategies in regards to Apple, mainly because – spoiler alert – it sheds just a little bit of light on a seemingly unrelated question that drives U.S. politicians nuts and Apple denizens into a frenzy: why can’t Apple manufacture in the U.S.?

The New York Times covered Apple’s complex tax practices in this article, de rigueur reporting during tax season in which companies such as Intel, General Electric and so on are put under the microscope to find out how the heck is it that they are able to pay so little, comparatively speaking, in taxes.

$2.4 Billion Saved

This weekend it was Apple’s turn and the Times’ reporting was thorough.

Apple—and no one should be surprised by this given its creativity in product design and retail—has been a trailblazer in creating cross-border tax strategies that are so novel and innovative that they are being copied by other multinationals. (Lucky for them a law was passed last year prohibiting the granting of patents on tax strategies, but I digress).

These tactics saved Apple—and its shareholders– $2.4 billion last year, the Times said, citing a recent study by a former Treasury Department economist, Martin A. Sullivan.

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Lest we forget: “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.” Judge Learned Hand (1872-1961), Judge, U. S. Court of Appeals

Interesting quote. I happen to agree but like any complex issue there are so many nuances. For instance, the Times article talks about what responsibilities if any Apple has to the community– a community that it has nurtured Apple and its employees. Or the US for that matter, which supplies it with adoring customers. These issues get complicated because companies and the government have embraced over the years the notion of a good corporate citizen, the result being you get lulled into thinking there is such as thing.

Fine. Then lets stop spending money on missile defense, veteran’s benefits, border security, the war on drugs, the war in Afghanistan and Iraq. Let’s stop giving tax subsidies to oil companies and big farmers. If it’s fine to NOT PAY TAXES then it’s fine to let Veterans fend for themselves, provide their own healthcare. It’s OK to cut the salaries of US service personnel, cut the defense budget to what Russia is spending per year. Problem with some Americans is they want to cut taxes but when it comes to cutting spending….they are against it. If you want America have the strongest military on earth and protect the assets of big corporations like APPLE….YOU’D BETTER BE WILLING TO PAY YOUR SHARE OF THE BILL INSTEAD OF TRYING TO FOIST THE BURDEN ON TO THE SHOULDERS OF OTHER AMERICANS.

Sure, of course. We all have to pay our fair share. Thing is Apple is paying it’s fair share under the law. Everything it does, and presumably its tactics have been vetted by the best legal advice in this country, is lawful.

And guess who has lobbyist in Washington with suitcases full of cash ready to pass out to desperate politicians who will write the tax to just to suit big corporations? There really is no such thing as FAIR SHARE when it comes to corporations who can afford to pass out hundreds of millions of dollars in corruption payoffs to politicians ready to do their bidding. And it you think US Congressmen can’t be corrupted by money…well, what can I say.

They ARE paying their fair share. It’s just that the US Congress has made such a crazy complicated tax code that smart companies are finding ways to make their “Fair Share” be less than last year. Nobody, and I mean NOBODY, purposefully pays more than they have to.

Why do they need to beg my government for tax breaks then. Crying all the time Obama is taxing them. I will never buy a apple product. They should be taxed more in the US. Company’s that build in the US should get the tax breaks. The things that go on in China are unforgivable , Apple is nothing but scum just like there Leader Romney and Rush slime ball. Even the stock holders of apple are idiots. Don’t beg my government. apple sucks . There products are junk. And people don’t need them. Whenever i see someone using there phone like a computer i look down on them. They are to stupid to carry a conversation or have a life without a stupid phone. Why don’t you Apple owners go cut a baby out of someone. Since you support that.

well the one thing I picked out of that was that Rush is a slime bag, which I happen to agree. But whatever. Companies don’t beg–they rally around certain themes that resonate with the public and Congress. My opinion is, if companies got everything they ever wanted on taxes they would move on to other issues not to their liking–bankruptcy laws or worker safety regulations for instance. I don’t mean to sound anti-corporate. It is the idea of companies humanizing themselves–or Congress doing it when they want to roll back regulations (ie.e “we can trust companies to the right thing mantra)–that irks me. Better to think of a company like a shark — an unemotional creature that constantly moves forward because that it just what it does.

Here is what you wrote….”Sorry all you Congress people bristling at the notion, but there is no such thing as a patriotic company or, for that matter, a company that can be counted on to do the right thing for customers or employees or larger society unless required by law. Companies exist to reward their shareholders. End of story” This is at least in part very wrong! Companies do the right things for employees in order to keep good employees. Turn over is one of the highest cost to a company. This in turn will do good for share holders. Markets determine what is a good wage, benefit for a particular job but there is a balancing act which is always done to keep your cpm nay productive. As well, congress should stop bristling and do something that would be as I call it “the dirtiest trick wee could play on our world wide competitors” = eliminate corporate taxes. Because you are correct. In this day and age, labor is not necessarily the highest cost to having a successful business. As for then Foxcon jobs coming here……we likely do not want them. Most are manual labor. We want the higher end mfg jobs that pay the best for the middle class. Companies all over the world would build here if we had zero corporate taxes. After all, we still buy 20% of everything made on earth.